NHS Privatisation Means More Expensive Bureaucracy

The Tory election victory on Thursday prompted me to buy a book, Health Reform: Public Success – Private Failure, edited by Daniel Drache and Terry Sullivan, which I had seen in one of the secondhand bookshops in Cheltenham. The book was published in 1999, and examines the inclusion of the private sector in the healthcare systems of America, the UK, Canada, Australia and elsewhere. It isn’t necessarily against this inclusion, but does treat it critically. And one of the points it makes is that private healthcare companies are as wastefully bureaucratic as the state planning system of the former Soviet Union. And because they’re run for a profit, they’re keen to inflate prices, not keep them down. the book states

But private insurance, as the American experience shows, brings in a whole new group of very powerful income claimants – a major expansion in the Z term. Large-scale private coverage is a horrendously expensive way to pay for healthcare. A huge private bureaucracy must be established to assess risks, set premiums, design complex benefit schedules, and review and pay (or refuse) claims. A corresponding financial apparatus is then required in hospitals, nursing homes, and private practices to deal with this system, in a form of ‘administrative arms race’.

Far from trying to minimize the cost of administrative overload, and match premiums as closely as possible to benefit payments, private insurers refer to the rate of benefit payment as the ‘loss ratio’ and try to maximize the difference between premium revenue and payout. That difference is the income of the insurance sector.

Yet, as we know from the experience of the single-payer system in Canada, all this financial paper-pushing turns out to be as unnecessary and wasteful as the old Soviet planning apparatus. These are not functions that anyone needs to perform once a decision has been made to cover the whole population. In the United States, bureaucratic waste by and in response to the private insurance industry now adds more than a hundred billion dollars per year, over 10 per cent, to total health care costs.

(pp.38-9).

Yet the Tories push privatisation, including that of the NHS, as a way of reducing costs and increasing efficiency, while the opposite is true. And I know true-blue Tories, who are shocked to hear that it does. They simply accept the neoliberal doctrine that private industry is someone how more efficient and cost-effect than state provision, even when it manifestly isn’t.

This point is made by Jacky Davis and Raymond Tallis in their polemic against NHS privatisation, NHS – SOS, but despite the newspaper headlines about the crisis in the NHS, I don’t think it’s properly appreciated. And the Tories are determined to privatise the NHS, which is why I bought the book, so I could put up more information about the effects of the piecemeal privatisation of the NHS on this blog.

NHS privatisation and the inclusion of private healthcare means greater costs and worse healthcare for those who can’t afford it. Which means the poor, the disabled, and the old. This is what Tory health policy means. 

 

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